32-2152. Action by broker or salesperson to collect compensation +14Arizona · Real Estate · English

A broker or salesperson may sue to collect earned compensation, but the complaint must allege the plaintiff was a qualified licensed broker or salesperson when the claim arose, and the court requires proof before hearing. The commissioner does not entertain purely civil disputes between licensees over compensation.

• ✓Complaint must allege licensure at the time the claim arose and be proven before hearing
• ✓Commissioner does not handle purely civil disputes between licensees over compensation

A broker or salesperson may sue to collect earned compensation but must allege and prove they were a qualified licensed broker/salesperson when the claim arose. The commissioner does not resolve purely civil disputes between licensees over compensation.

• ✓Plaintiff must allege and prove licensure at the time the compensation claim arose
• ✓The commissioner does not entertain purely civil disputes over earning, splitting, or nonpayment of compensation
• ✓Nothing permits compensation in violation of sections 32-2155 or 32-2163

Licensing boards issuing professional, recreational, or occupational licenses must record applicants' social security numbers to aid child support enforcement, with limited exceptions.

• ✓Each licensing board/agency must record the applicant's social security number on the application and enter it in its database to aid the DES in locating parents/assets and enforcing child support orders
• ✓This does not apply to certain Title 17 licenses not issued by automated drawing
• ✓If a board allows an alternative number on the face of the license while keeping the SSN on file, it must advise the applicant of this fact

Within five years preceding, the commissioner may discipline for misrepresentation, false promises, acting for multiple parties without written consent, violating the chapter/rules, false advertising, employing unlicensed persons, unauthorized compensation, failing to account for/remit monies, and paying/receiving unlawful rebates.

• ✓Acting for more than one party without written consent of all parties is grounds for discipline
• ✓Employing any unlicensed salesperson or associate broker is grounds for discipline

Grounds include failing to keep escrow/trust records, commingling or converting client monies, failing to produce records on demand, failing to maintain complete transaction records, and a broker's failure to exercise reasonable supervision over salespersons, associate brokers, or entities for which the broker is designated broker.

• ✓Commingling or converting client monies is grounds for discipline
• ✓A broker's failure to exercise reasonable supervision is grounds for discipline

The commissioner may discipline regardless of timing for procuring a license by fraud, felony/moral turpitude convictions, substantial misrepresentation, conduct constituting fraud or dishonest dealings, unlicensed practice, demonstrated incompetence, violating orders, and failing to respond during an investigation or audit.

• ✓Conviction of a felony or a crime of moral turpitude is grounds for discipline
• ✓Failure to respond during an investigation or audit is grounds for discipline

Grounds include violating federal fair housing law, Arizona civil rights law, or similar ordinances, and tendering a knowingly false or inaccurate wood infestation report in a residential transfer.

• ✓Violating federal fair housing law or the Arizona civil rights law is grounds for discipline
• ✓Tendering a knowingly false or inaccurate wood infestation report is grounds for discipline

A letter of concern is an advisory letter notifying a licensee that conduct does not warrant discipline but should be modified. A provisional license allows practice subject to a consent order or the commissioner's terms. The lapse or surrender of a license does not deprive the commissioner of jurisdiction.

• ✓A letter of concern is advisory and does not constitute disciplinary action
• ✓Surrender or lapse of a license does not deprive the commissioner of jurisdiction to proceed

The commissioner may suspend, revoke, deny, issue a letter of concern, or issue a provisional license if within five years the holder/applicant, in performing licensed acts, pursued misrepresentation/false promises, acted for more than one party without written consent, violated the chapter or rules, published false advertising, used a broker title illegally, employed unlicensed persons, accepted unauthorized compensation, or misrepresented their broker affiliation.

• ✓Acting for more than one party without written consent of all parties is grounds for discipline
• ✓Pursuing misrepresentation or making false promises is grounds for discipline
• ✓Employing an unlicensed salesperson or associate broker is grounds for discipline
• ✓Disciplinary grounds apply to acts within the five years immediately preceding

Grounds also include failing within a reasonable time to account for or remit monies or surrender property belonging to others, issuing an appraisal on property the licensee has an interest in without disclosure, paying/receiving rebates or commissions in violation of the chapter, and inducing contract breaches to substitute a new contract for the licensee's benefit.

• ✓Failing within a reasonable time to account for or remit others' monies or property is grounds for discipline
• ✓Issuing an appraisal on property the licensee has an interest in requires full disclosure of the interest
• ✓Paying or receiving rebates/commissions in violation of the chapter is grounds for discipline

A real estate broker must disclose in writing to all parties in a transaction, at least three calendar days before closing, the name of each employing broker who represents a party and who will receive compensation from the transaction.

• ✓Disclosure must be in writing to all parties at least three calendar days before closing
• ✓Must name each employing broker representing a party who will receive compensation

Before offering subdivided lands for sale or lease, the subdivider must notify the commissioner in writing. The notice must include owner/subdivider identity, legal description, title condition and blanket encumbrance provisions, terms of disposition, recorded subdivision map, access/utility/sewage provisions, nearby schools, intended uses, use restrictions, principal broker's name/address, and various indebtedness, tax, water, and improvement statements.

• ✓Written notice of intention required before offering subdivided lands for sale/lease
• ✓'Principal' means a person/entity with 10% or more financial interest (or 10% trust beneficiary)
• ✓Notice must include a recorded subdivision map filed with the county recorder
• ✓Notice must disclose blanket encumbrance provisions allowing purchasers to obtain clear title

The notice must state whether any portion of the subdivision is in the vicinity of a military airport/ancillary facility, a public airport, or a high noise or accident potential zone. Conversions from multifamily rental to condominiums require a statement of that fact and the original construction completion date.

• ✓Must disclose location in vicinity of military/public airport or high noise/accident potential zone
• ✓Multifamily-to-condo conversions require disclosure and original construction completion date

In an active management area, the subdivider must provide a certificate of assured water supply (or written commitment/exemption) with fees paid. Outside active management areas, adequate water supply reports may be required depending on whether the county/city adopted relevant provisions; if inadequate, all promotional material and contracts must display the water resources report or approved summary.

• ✓Active management area subdivisions require a certificate of assured water supply
• ✓Promotional materials/contracts must display water report when supply is inadequate or under exemption

It is unlawful for persons acting in concert to avoid Article 4 by dividing land through a series of owners/conveyances resulting in an unregistered subdivision. Proving unlawful acting in concert by a licensee requires showing the licensee knew or should have known the property was subdivided land; a familial relationship alone is insufficient.

• ✓Cannot use series of owners/conveyances to circumvent subdivision registration
• ✓Familial relationship alone is not sufficient to prove unlawful acting in concert

Creating six or more lots, parcels, or fractional interests is subject to Article 4, except for: 36+ acre partitions, foreclosure/trustee-sale results, court-ordered creations, oil/gas/mineral security interests, registered/exempt securities, special commissioner exemptions, or a sale occurring 10+ years after another (with no intent to subdivide).

• ✓Six or more lots/parcels/fractional interests generally trigger Article 4
• ✓Exemption for each interest of 36 acres or more on a partition basis
• ✓Exemption for foreclosure/trustee sale results (but not to circumvent the article)

No subdivided-land transfer instrument or restriction may limit a party's right to appear/testify regarding zoning, permits, or official acts; conflicting provisions are void as against public policy. Subdividers advertising a retirement/adult/senior community must include those promises in the deed restrictions.

• ✓Instruments cannot limit a party's right to testify on zoning/permits/official acts
• ✓Retirement/age-restricted community promises must be in the deed restrictions

Except as otherwise provided, a subdivider need not disclose items over one mile from the subdivision boundaries, though foreign nations or tribal lands within a one-mile radius must be disclosed.

• ✓No disclosure required for items over one mile from subdivision boundaries
• ✓Foreign nations or tribal lands within one mile must be disclosed

Sections 41-1093.04 through 41-1093.08 (amended/created by SB1367, HB2308 in 2024) govern occupational licensing regarding criminal records, petitions for review of criminal record, drug offense conviction eligibility, and denial/suspension/revocation based on prior criminal offense.

• ✓An applicant may petition for review of criminal record before applying (41-1093.04)
• ✓A prior criminal offense must be substantially related to the occupation to justify denial
• ✓Boards must follow specified procedures and notice before denial based on criminal history (41-1093.08)

Sections 41-1001.01, and 41-1072 through 41-1080 establish the regulatory bill of rights for small businesses and licensing time frame requirements including consequences for agency delay.

• ✓Agencies must observe the regulatory bill of rights protections (41-1001.01)
• ✓Agencies must comply with administrative completeness and substantive review time frames
• ✓Failure to meet overall time frames may result in fee refunds and penalties (41-1077)

Sections 41-619.55, 41-1750, and 41-1758.03 (amended by HB2243, 2024) govern fingerprint clearance cards, good cause exceptions, the central state repository, and issuance with immunity.

• ✓Fingerprint clearance cards are issued through DPS and the Board of Fingerprinting
• ✓A good cause exception process exists for applicants with disqualifying history (41-619.55)
• ✓The central state repository maintains criminal history records (41-1750)

Section 41-3030.05 provides for the termination (sunset) of the state real estate department on July 1, 2030, subject to legislative review of agencies.

• ✓The state real estate department is scheduled to terminate July 1, 2030 unless continued
• ✓The department is subject to legislative sunset review

Licenses, certificates, or registrations issued to military members do not expire during federal active duty and are extended 180 days after return, subject to notification. Renewal during the extension avoids late fees.

• ✓Licenses of National Guard/reserves members do not expire during federal active duty and are extended 180 days after return, provided notification is given to the issuing authority
• ✓Regular armed forces members' licenses are extended 180 days from the date of expiration with proper notification
• ✓If renewed during the extension period, only normal fees apply—no late or delinquency fees
• ✓The member must present official military orders, a redacted military ID, or commanding officer verification before the extended period ends to qualify

A broker may employ and pay only active licensees, and a licensee may accept compensation only from the legally licensed broker to whom licensed or from a qualifying W-2 employer with the same employing broker and written permission. It is unlawful to pay compensation for broker acts to a person not licensed at the time the service is rendered.

• ✓A broker may employ and pay only active licensees
• ✓Compensation may only be paid to a person licensed at the time the service is rendered

No action may be brought against a transferor/lessor or licensee for failing to disclose that a property was the site of a natural death, suicide, homicide, or felony, was occupied by a person with HIV/AIDS or a non-common-occupancy disease, or is near a sex offender. Failing to disclose these is not grounds for termination or rescission.

• ✓No liability for failing to disclose death, suicide, homicide, or felony on the property
• ✓No liability for failing to disclose HIV/AIDS occupancy or proximity to a sex offender

If a person is engaging in a violation, the commissioner may issue an order to cease and desist, make restitution, or take corrective affirmative action. An aggrieved person may request a hearing, and the commissioner may seek an injunction in court.

• ✓Commissioner may issue cease and desist orders and require restitution
• ✓An aggrieved person may request a hearing on a cease and desist order

A licensee may not collect compensation for negotiating real property loans unless licensed under title 6 chapter 9, discloses dual compensation, and does not violate other law. Brokers may employ residential leasing agents/managers, but the designated broker remains responsible for supervision.

• ✓Collecting loan negotiation compensation requires title 6, chapter 9 licensure and disclosure
• ✓Designated broker retains supervision responsibility over residential leasing agents/managers

Before suspending, revoking, or denying renewal, the commissioner must give written notice and afford a hearing, with the respondent answering within 20 days. A summary suspension may be ordered if public health/safety imperatively requires emergency action, and the department may summarily suspend upon notice of a felony conviction with incarceration/supervision.

• ✓Respondent must file a written answer within 20 days after service of a notice of hearing
• ✓Summary suspension available for emergency action or upon felony conviction notice
• ✓Voluntary surrender at least 10 days before a hearing bars future license issuance

Upon execution, a licensee must expeditiously deliver a legible copy of the signed document to each signing party. During a listing, licensees must promptly submit all offers to the client, continuing until closing, and are not released by acceptance of an offer unless instructed in writing. Brokers retain receipts, disbursements, closing statements, and signed documents.

• ✓A licensee must expeditiously deliver a signed copy of the document to each signing party
• ✓All offers must be promptly submitted to the client and continue until closing unless instructed otherwise in writing

A developer or agent must ensure any agreement for the sale/lease of a property interest requiring a public report contains bold/larger language above the signature stating the developer will give the purchaser a copy of the public report and an opportunity to read it before signing. The document's nature must be conspicuously disclosed.

• ✓Contracts requiring a public report must include bold language above the signature about receiving and reviewing the public report
• ✓The nature of the document must be conspicuously disclosed

Arizona must issue a license to a person establishing residency (or a military spouse) who holds an out-of-state license in good standing, meeting specified conditions. This is Arizona's universal licensing recognition law.

• ✓Applicant must be currently licensed in at least one other state in the same discipline and practice level, in good standing in all states held
• ✓The applicant must have been licensed by another state for at least one year and passed any required examination
• ✓The applicant must not have had a license revoked/surrendered under investigation, no imposed discipline, no pending complaints, must pay all fees, and have no disqualifying criminal history
• ✓The regulating entity may still require an examination specific to Arizona laws (except for military spouses under subsection A)

Regulating entities must post a required notice about universal recognition and submit any denial to the governor for review. 'Regulating entity' excludes single-elected-official agencies, the Corporation Commission, the judiciary, and certain boards.

• ✓Regulating entities must prominently print the statutory § 32-4302 notice on all applications and websites
• ✓Before denying a license under this section, the entity must submit the application and reason for denial to the governor for review
• ✓Beginning July 1, 2022, entities must track and annually report application information to the governor
• ✓'Regulating entity' excludes agencies headed by a single elected official, the corporation commission, the judiciary, and ballot-measure boards created at/after Nov 1998

Sections 33-531 through 33-539 (new sections from SB1432, Ch. 58, 2024) establish a uniform act allowing property owners to remove or disclaim unlawful and discriminatory restrictive covenants from their property records.

• ✓Discriminatory restrictive covenants are unlawful and unenforceable
• ✓Owners may record a document to disclaim unlawful restrictions (see also 32-2107.01)
• ✓The act is a uniform act with severability provisions

Various Title 33 sections amended in 2024 govern homeowners' associations and planned communities, including condominium interior improvements (33-1221), HOA fees (33-442), flagpoles (33-1808), meeting agendas (33-1248, 33-1804), and declarant control (33-1820).

• ✓HOAs may not prohibit the display of flags on a flagpole under specified conditions (33-1808)
• ✓HOA meeting agendas must comply with statutory notice requirements (33-1248, 33-1804)
• ✓Condominium interior improvements have approval requirements (33-1221)

Section 33-992.01 (amended by HB2110) governs mechanics' lien notice, and 33-1452 (amended by HB2146) prohibits certain landlord restrictions on mobile home cooling.

• ✓Mechanics' lien claimants must provide required preliminary notice (33-992.01)
• ✓Landlords may not prohibit tenant cooling measures for mobile homes (33-1452)

The commissioner may by special order exempt certain subdivided lands or fractional interests from some or all of Article 4 upon written petition showing compliance is not essential to public interest or buyer protection. Orders relate to specific lands/interests. A petition requires a $100 initial nonrefundable fee.

• ✓Special order exemption requires written petition and satisfactory showing
• ✓Petition requires a $100 initial, nonreturnable fee

A licensee who violates the chapter, a rule/order, deviates substantially from a public report, or engages in unlawful practices under section 44-1522 for subdivided/unsubdivided lands may be assessed a civil penalty, after a hearing, not to exceed one thousand dollars for each infraction.

• ✓Civil penalty not to exceed $1,000 for each infraction
• ✓Civil penalties are assessed after a hearing

A final decision of the commissioner may be appealed to the superior court in Maricopa county. If an appealing party is declared indigent, the department pays for the reporter's transcript and provides a certified copy of the administrative record at no charge.

• ✓Final commissioner decisions are appealed to superior court in Maricopa county
• ✓Indigent appellants receive the transcript and record at no charge

Exempt under Article 4: bulk sale/lease of six or more lots/parcels/fractional interests to one buyer in one transaction, and sale/lease of lots/parcels of 160 acres or more.

• ✓Bulk sale of 6+ lots to one buyer in one transaction is exempt
• ✓Sale/lease of lots of 160 acres or more is exempt

Exempt from 32-2181(A) and 32-2183(A): commercial/industrially zoned parcels, and single platted subdivision lots meeting numerous conditions (public report within 5 years, current requirements met, recorded plat, completed/assured improvements, no material changes, clean-background principals, delivery of the public report to buyers with a receipt, compliance statement, and prior notice to the commissioner).

• ✓Commercial/industrially zoned parcels are exempt from notice and public report requirements
• ✓Existing subdivision exemption requires a public report issued within the past 5 years
• ✓Subdivider must deliver the most recent public report and take a receipt from the buyer
• ✓No principal may have disqualifying felony convictions, civil judgments, or disciplined licenses

Exempt: conveyance back to a person who conveyed the lot to a home builder; sale/lease of individually and separately acquired lots not acquired for development (not in a platted subdivision, same legal description, compliant seller); and improved out-of-state lots exempt from federal law with a state-required disclosure document delivered.

• ✓Individually acquired lots not for development are exempt if not in a platted subdivision with same legal description
• ✓Out-of-state improved lots exempt if state-required disclosure document is delivered

An improved lot sale in an Arizona subdivision (where 5+ sales previously occurred) is exempt if it is the seller's first or second sale within 12 months, within city/town limits, with complete/available electricity, telephone, water, and sewage, permanent maintained access, dedicated maintained streets, completed common areas, escrowed down payments, and the seller has not held more than two lots in the prior 12 months.

• ✓Exemption allows only the seller's first or second sale within a 12-month period
• ✓Down payment/earnest money must be held in a neutral in-state escrow depository until closing
• ✓Seller must not have had an interest in more than two lots in the prior 12 months

Sections 12-901 through 12-914 govern judicial review of administrative decisions, including scope, jurisdiction, venue, service of process, parties, scope of review, and appellate review.

• ✓Administrative decisions are subject to judicial review in superior court
• ✓Review must be timely commenced and follows statutory procedures
• ✓The court's scope of review is limited to the administrative record and legal questions

Sections 12-1551 and 42-18152 through 42-18236 (amended/created by SB1431, Ch. 176, 2024) govern the right to redeem property after a foreclosure or tax lien sale, including redemption periods and procedures.

• ✓Property owners have statutory redemption rights after certain foreclosure and tax sales
• ✓Redemption periods and procedures are set by statute
• ✓New sections establish additional owner protections in tax lien foreclosures

Sections 12-3401 through 12-3412 (new from HB2521, Ch. 122, 2024) establish procedures for partition of inherited (heirs') property, protecting co-owners' interests.

• ✓Inherited property held by co-owners may be partitioned under statutory procedures
• ✓The act provides notice, appraisal, and buyout rights before forced sale